Can you explain further? What do you mean by "closed" and "open" auction?
AFAIK, they outsourced the auction process to a third-party company specializing in conducting auctions. That company and the bidders colluded to defraud municipalities. Corrupt auctioneers also paid bribes to politicians to get hired as as auctioneers.
Do you really not see anything wrong with this picture?
Edit: Removed paragraph with analogy involving ebay. Analogies suck, and it didn't really apply here.
An open auction is one where everyone's bids are public and visible to everyone hence allowing price discovery, contrasted with a closed auction, one where the bids are sealed and not disclosed to any other parties. It seemed from the article that the bids were submitted over the phone and known to the broker ahead of the conclusion of the auction, as opposed to a sealed first-price auction.
You can see what the others bid on eBay. If you choose to bid just a penny over the highest bid (as opposed to bidding up by a larger amount), you're unlikely to be prosecuted.
And the problem was that they became UNsealed auctions due to corruption.
After reading the article, are you saying that the auctioneer conducted a proper sealed auction?
AFAIK, it is the norm worldwide in private as well as public sectors for contracts to be given out via sealed bid auctions, as opposed to ebay-style open auctions.
The ebay-style process works for ebay because there are large number of potential buyers who don't know each other. IMHO, if multi-round open bidding is allowed for auctions like this with a limited number of possible bidders, price collusion is likely to occur even more easily.
Sealed auctions introduce inefficiencies in capital allocation. The parties writing the laws benefit from these inefficiencies, hence market's move to transparency is written up as collusion.
Switch to open auctions would remove incentives for corruption.
There will always be incentives for corruption. For instance, your money is not flowing to me at the moment, which I find to be highly inefficient.
Giving me all your money would remove the incentive to rob you.
Also, are you seriously appealing to anarchist idealism as a justification for bid-rigging? How many of these intellectuals who are using their brainpower to rip off local governments could keep their small fortunes for more than a month in a state of anarchy? They're precisely the kind of people who benefit the most from the existence of a state, so cry me a river at the injustice of them having to play by the state's rules.
AFAIK, they outsourced the auction process to a third-party company specializing in conducting auctions. That company and the bidders colluded to defraud municipalities. Corrupt auctioneers also paid bribes to politicians to get hired as as auctioneers.
Do you really not see anything wrong with this picture?
Edit: Removed paragraph with analogy involving ebay. Analogies suck, and it didn't really apply here.